Tuesday 7th May 2019
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Genesis Energy is aiming to sell up to $18.4 million of debt it has been unable to recover from its retail customers.
The country’s biggest electricity and gas retailer is seeking quotes from firms interested in buying the debt and recovering it themselves.
It wants a “savvy” purchaser to bid for the debt and present their plan for how it will communicate with the company’s former customers and the methodology it will use to recover the funds in a “respectful and lawful” manner.
“We do not want theoretical advice about how to recover the debt ourselves,” Genesis says in its 22-page request for quotes.
“This is a great opportunity to make significant profit by purchasing Genesis’ rights, title and interest in the customer retail debt and recovering the debt for yourself.”
Genesis has about half a million power, gas and LPG customers across its Genesis and Energy Online brands and brought in total revenue of $1.36 billion in the six months through December.
Its disconnection rate, for customers not paying, has traditionally been higher than that of the other major retailers, but non-payment remains an issue across the industry.
In the June 2018 year, Genesis made a $6 million allowance for doubtful receivables, down from $7 million the year before. Mercury NZ recognised a $3 million allowance on receivables and wrote another $3 million off as uncollectable. Meridian Energy and Contact Energy each wrote off $6 million of receivables that year.
Retailers have spent more than a decade trying to come up with new ways to help customers stay on top of bills, including pre-pay options, weekly billing and plans that smooth payments throughout the year – such as the Genesis control-a-bill option.
They have developed protocols to ensure medically dependent customers remain supplied and for working with budgeting services and the Ministry of Social Development.
Disconnection rates last year were roughly half those in 2007, when the death of a medically dependent customer put the issue on the national agenda.
Last year retailers urged the government to target the $440-million plus winter energy payment it introduced last year at the country’s most vulnerable consumers – rather than providing it to all beneficiaries and superannuitants regardless of need.
The debt Genesis is offering for sale is from more than 23,000 customers, with almost $8.2 million of it more than five years overdue. Another $5.3 million is more than 15 months, but less than two years, overdue. Firms don’t have to bid for debt that is more than five years overdue.
Genesis noted that it only disconnects customers considered to be high-risk, and then not until 25 days after a default on payment. It typically refers debts to collection agencies 30 days after default, and they work to recover it for another three months. Legal action and field visits have seldom been undertaken to recover customer debts, it says.
As part of the proposal, Genesis plans to exclude from the package debts of less than $100, those likely to become statute-barred within six months, those where the customer has died, is in prison, is bankrupt or in receivership, those being disputed through an external agency, or where the debtor has been the subject of fraud.
Genesis envisages the new arrangement will begin in June for an initial one-year contract, with two options to renew for another year each.
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